Analyst at Vetiva Forecasts Strong Growth Prospects For Safaricom

Kayode Tokede

Analyst at Vetiva Research has predicted strong growth prospects for Safaricom Plc, a leading telecommunications provider in Kenya.

The SSA Telecoms Analyst at Vetiva, Victoria Ejugwu, in a report titled “Positioned for long-term growth” highlighted that this projection is hinged on the opportunities that exist in the telecom market in East Africa, in which Safaricom has positioned itself to uptake.

Additionally, she noted that data services and mobile money are two strongholds for the company, as these business segments remained under-tapped, due to the low coverage within the region.

Thus, she asserted that these service segments would remain growth drivers for the company both in the Kenyan market, and the East African market at large.

She also noted that the company has a strong brand positioning and thus would remain very competitive in the market. She, however, highlighted that downside risk to growth remains weak macro-economic factors.

According to Ejugwu, “the weak macro environment has a dwindling effect on purchasing power, and that might ultimately dampen demand for telco services.”

The report also noted that the changing regulatory landscape could be a challenge for Safaricom, as players continue to be pressured by regulators.

She asserted, “In Kenya, the heavy regulatory policies of the Communications Authority of Kenya have slowed the growth and expansion of some major players. One instance was the downward revision of data and voice tariffs.

Also, more recently, the Authority gave a directive to mobile network operators (MNOs) to block SIM cards that were yet to be registered. However, despite this drawback, the sector has proved to be resilient, and has maintained growth thus far.